Civic body may delay new property tax system

With eight months left for the civic elections, the municipal body’s political leadership is not likely to let the new capital value-based property tax system to be implemented from this year. Bhavika Jain reports.

With eight months left for the civic elections, the municipal body’s political leadership is not likely to let the new capital value-based property tax system to be implemented from this year.

While the civic officials are rushing to table the draft provisions in the standing committee this month, the political heads feel that, if approved, the increase in property tax in the island city, will burden their voters.

Officials from the property tax department said if the Brihanmumbai Municipal Corporation (BMC) doesn’t approve of the proposal, it would lead to “bureaucratic mess”.

The BMC is in the process of changing the system of calculating property tax based on the property’s rateable value to capital value to bring about parity in taxation. (See box)

The new calculation will be applicable in retrospective effect from April 1, 2010. Based on the new system, those living in the island city will have to pay twice the property tax they currently pay, while those in the suburbs will end up paying less —20-25% of what they pay now.

The BMC is currently sending provisional property tax bills calculated on the capital value, and the amount will be adjusted when the new system is implemented.

The state has sanctioned the amendment of the BMC act to accommodate the new system and issued a March 2012 deadline to send out bills based on the new tax system. Sources in the BMC said the standing committee is likely to form a committee to study the new tax system and is expected to drag its feet on the issue until December— when the election code of conduct will be implemented.

Rahul Shewale, civic standing committee chairman, said: “We will have meetings with all the stakeholders who will be affected by the change.”

Civic officials insist that the new property tax structure will not affect the political support of the ruling party. “The new system doesn’t cover the slums, which are the vote bank. Also, wherever there is an increase in property tax, there will also be a cap on it,” said a civic official, on condition of anonymity.

Rajiv Jalota, additional municipal commissioner, said the administration would clear all doubts after the draft is tabled.